The U.S. Agriculture Department (USDA) released its quarterly stocks estimates and also its prospective plantings reports on March 28th.

Hereunder is the USDA quarterly stocks data:

The quarterly stocks reports offered a lot of surprises for the market, and none of them implied that higher prices are coming except for rice.

Rice data was on the high side of expectations, but still showed tight supplies overall. This is a market that has been moving sideways for a long time.

There is talk that the U.S. deep south and Texas are basically sold out on rice and that millers in Louisiana have started to source rice from northern Arkansas.

That does not happen unless the supplies are very tight as it is costly for millers to haul rough rice all that way for milling.

Overall, the stocks reports imply that futures have made highs and can generally work sideways or lower. It will take some signs of new demand or bad weather here in the U.S. to change trends back to up for any more than a short term move.

Rice is the lone exception as stocks there remain tight and the market is just starting to factor the tight U.S. market into the futures price.

Rice is one market with some significant upside price potential and it might not matter what happens to the other grains.

The Philippines said it is importing 163,000 metric tons of rice from four countries as part of import obligations under the World Trade Organization to buy a total of 183,000 tons in 2013.

The Philippines is one of the world’s top consumers of rice. The government of President Benigno Aquino said it is aiming to make the country self-sufficient in the staple food of its nearly 100 million people.

Some 98,000 tons of the rice will come from Thailand, one of the world’s top exporters of the grain, with 25,000 tons each coming from China and India, and the remaining 15,000 tons from Australia, the government’s National Food Authority said in a statement. The NFA is the government agency created to ensure a stable market in the politically sensitive grain.

The timing of the imports at the start of the second quarter of 2013 may be aimed at building up government buffer stocks which has declined by nearly 20 percent in a month.
The Philippine Agriculture Department forecast rice inventories as of Feb. 1 at 2.02 million tons, nearly 20 percent down from the previous month’s level.

Rice stocks in government and commercial warehouses stood at just over a month of daily consumption so analysts believe the imports are meant to shore up inventories. The Philippines consumes around 35,000 to 36,000 metric tons of rice a day.

The imports are also being done ahead of the third quarter of the year, when rice inventories in the Philippines seasonally drops to its lowest level for the year. Given shipping times and the filing of necessary documentation, the imported rice will likely arrive in mid-May or later, the analysts believe.

The Philippine Commodities Digest believes total rice imports by Manila in 2013 will reach at least 850,000 tons. U.S. agricultural experts from the USDA feel the imports would hit 1.5 million tons of rice. The experts’ forecast is not official USDA data.

The Philippine government hopes high-yielding seeds and improvements in infrastructure, facilities such as irrigation, will help boost production of rice.

But limits in the acreage planted to rice, historically low yields, and a surge in rice demand brought on by an increasing population may well thwart government attempts to make the Philippines self-sufficient in its staple food.

BUYING AND SELLING PRICES OF RICE FROM THE PHILIPPINES’ NATIONAL FOOD AUTHORITY (in Philippine pesos per kg)
As of March 27, 2013

CORN AND SOYBEANS WEIGHED DOWN BY USDA REPORT, WHEAT TRACKS CORN
By Jack Scoville, The Price Futures Group

The most price negative of the USDA reports was in corn. The report showed much higher stocks than the trade expected, and implied that high prices had done a job in rationing demand.

Stocks are still down from last year, and supplies might be tight by the end of the year, but the market can now afford to relax a bit.

Add to that news that Argentine corn is on its way to the southeast U.S., and you have a situation that has changed a lot over the last week or two.

It will now get much harder for bulls to move prices significantly higher. They will need to find additional demand before prices can do a whole lot.

On the other hand, the demand remains strong enough as it is to keep prices from breaking too much, especially with the whole growing season still in front of us.

It is very possible that prices will develop a new trading range until production prospects for the coming year are known.

The soybeans stocks report was also a big bearish surprise. It also implied that the situation is not quite as tight as thought, but ideas are that China will look to buy again if at all possible, so the bearish influence might not be so big for soybeans.

In addition, there has been talk of Brazil soybeans moving to U.S. crushers, but none of this has been confirmed like the Argentine corn has.

The wheat stocks were also higher than expected, but within the realm of error and wheat futures were mostly down hard due to the corn weakness, not due to the data.

The prospective plantings reports, a survey of farmers on planting intentions, was about as expected by the trade and not a reason to buy or sell for the most part.

Soybeans planted area was a little lower than expected, and implies that new crop soybeans prices should be stronger than corn or any old crop prices.

Traders will watch the weather now. It has been cold and wet in many parts of the middle of the U.S. where these crops will be grown. It could be that corn area drops a bit and soybeans increases a bit if the weather continues this way.

A lot of the gains in corn area came in the south and at the expense of cotton. Some of these areas might switch to soybeans if it gets too late to plant corn. This type of switching is still a few weeks away from happening.

Futures should develop a short-term down trend or at least test the lower end of the trading range. Moves lower this week could open up down side potential below 2250 (ringgit/ton) — basis the nearby futures contract — and maybe back to the lows below 2100.

There is no doubt that the palm oil is out there. Demand has been ok, but traders hope for more as the demand has fallen behind month-ago levels.

But soybean oil might work lower now and this might create some selling pressure on palm oil as well. The charts show that any move lower now would find new speculative selling that could push prices more than one might normally expect given the fundamentals.

All grains futures ended the reporting week lower with strong pressure today from the USDA Stocks and Planting Intentions reports.

Corn Stocks were estimated higher-than-expected at 5.4 billion bushels (bb), with the USDA March Planting Intentions estimated at 97.3 million acres. The soybean Planting Intention estimate was lower-than-expected at 77.1 million acres and Quarterly Stocks estimated at 1.0 bb. U.S. wheat Stocks were slightly higher-than-expected at 1.23 bb.

Wheat futures were supported on Friday by a lower U.S. dollar against foreign currencies and cold, dry weather conditions in the U.S. Southern Plains.

Monday, Tuesday and Wednesday, soybean futures had some support from new confirmed export sales of new crop soybeans, commercial buying, continued backlog of vessels in Brazil and continued tight supplies of old crop soybeans.

A better-than-expected inspected-for-export figure of 17.225 million bushels for the week ending March 21, commercial buying on Wednesday and a slight improvement in the ethanol production report for the week ending March 22 were some factors supporting the corn futures earlier in the week.

CASH BIDS FOR WHEAT AND CORN AT PORTLAND AS OF MARCH 28, 2013: USDA

Bids for U.S. 1 Soft White Wheat delivered to Portland in unit trains or barges during March were not available today as most exporters were not issuing bids for nearby delivery.

Forward month bids for soft white wheat were as follows:
April 8.0775-8.10
May 8.0775-8.15
June not available
August New Crop 7.25-7.3925

One year ago, forward month bids for soft white wheat were as follows:
April and May 7.00-7.05
June 6.90-7.02
July 6.70-6.90
August New Crop 6.60-6.70

Bids for 11.5 percent protein U.S. 1 Hard Red Winter Wheat for March delivery declined by 33.75 cents per bushel compared to last Thursday’s noon bids in lining up with the lower Kansas City May wheat futures.

On Thursday, bids were as follows:
March 8.6675-8.7175, mostly 8.6675
April 8.5675-8.7175
May 8.4675-8.7175
June 8.3725-8.6725
August New Crop 8.0875-8.1375

Lower Minneapolis May wheat futures and a lower basis bid by some exporters weighed on bids.

Protein scales for non-guaranteed 14.0 percent protein were plus zero cents each 1/4 of a percent of protein up to 16 percent protein and minus four to five cents each 1/4 of a percent of protein down to 13 percent protein.

On Thursday, bids for non-guaranteed 14 percent protein were as follows:
March 9.1525-9.3025, mostly 9.2325
April 9.1025-9.3025
May 9.0525-9.2525
June 8.9550-9.0050
August New Crop 8.7075-8.8075

Bids for U.S. 2 Yellow Corn delivered to Portland in single rail cars were 293.75-294.00, 14.50 per ton lower than last Thursday’s bids of 308.25-308.50.

Bids for U.S. 2 Yellow Corn truck delivered to the inland feeding areas of Yakima, Washington, and Hermiston, Oregon were 294.75-298.25, 13.50 to 14.00 per ton lower than last Thursday’s bids of 308.25-312.25.

COLUMBIA, OREGON GRAIN VESSEL UPDATE AS OF MARCH 28, 2013: USDA

There were 10 grain vessels in Columbia River ports on Thursday, March 28th, with four docked compared to nine last Thursday with four docked. There were no new confirmed export sales this week.

Outstanding U.S. white wheat export sales as of March 21, 2013 for the marketing year beginning June 1, 2012 and ending May 31, 2013, totaled 675.6 thousand MT compared to 753.8 thousand MT on March 14, 2012, and 1337.0 thousand MT one year ago.

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The Philippine Commodities Digest is a weekly publication of New Jersey-based A & V Media, providing a comprehensive roundup of developments and trends in the country’s key farming and mining sectors.

Rene Pastor was a journalist for Reuters for 23 years, covering the commodities market since 1994 before leaving the agency in 2012. He set up the commodities coverage for Reuters in Manila, and became deputy editor in chief for commodities in Asia when he was in Singapore from 1996 to 1998. In New York, he wrote about sugar, cotton, coffee, cocoa and orange juice. He chronicled the market-moving impact on commodity markets of the 9/11 attacks and the aftermath of Hurricane Katrina in 2005.

Jack Scoville is vice president of The Price Futures Group in Chicago. He is a market analyst specializing in rice, grains, softs, oil seeds. He has more than 30 years of experience and spent 10 years working on the floor of the Chicago Board of Trade.

Aaron Cook is a consultant meteorologist with MetraWeather, the international commercial arm of the Meteorological Service of New Zealand. He specializes in weather forecasts for the energy and commodities sectors in Asia and Australasia, identifying and analyzing market-moving weather and climate events occurring from a few hours to several months into the future.